Appreciating biodiversity - modernising economic accounting in Germany

Initial questions
In collaboration with partners from the business sector (BASF and Value Balancing Alliance) we are investigating how national and corporate economic reporting can be further developed in order to include information on biodiversity and ecosystem services: Which values and indicators can be included in corporate and national accounting? Are there synergies between corporate and national accounting? How can this support the national biodiversity strategy? What is the acceptance of biodiversity accounting among stakeholders? What impacts are to be achieved?

Aim of project
The project will contribute to the consideration of biodiversity and ecosystem services (BES) in economic accounting and reporting at governmental and corporate level. By modernising economic reporting - especially in the direction of the SEEA-EA1 - a higher appreciation of biodiversity and ecosystem services is to be achieved among political and economic decision-makers as well as societal actors in Germany. To this end, the project will promote inter- and transdisciplinary fora where stakeholders from national and corporate level exchange information on methods, standards and policy interfaces for the inclusion of physical and monetary values related to nature. Above all, the project intends to have a positive effect on the transformation towards a more ecological way of doing business.

Situation analysis
The decline in biodiversity continues and current sustainability efforts, protected area systems and biodiversity strategies have not reversed the trend in biodiversity loss. A major cause is the structural failure of economic accounting and reporting systems at national and corporate level, where the importance of biodiversity and ecosystem services often play no or only a minor role. With the growing understanding of the central role of biodiversity for intact ecosystems and the provision of ecosystem services, nature is gaining recognition for its contribution to both social well-being and future prosperity. Hence, international initiatives by the UN, the EU Commission and the World Bank are working towards the inclusion of biodiversity into national and corporate accounting systems.

As the consequences of climate change and the decline in species are becoming more evident, there is growing awareness among the majority of German citizens for the need of more sustainable practices. Not only political decision-makers but also companies are increasingly scrutinized for their ecological responsibility. Businesses that consider ecological concerns in their production processes and act accordingly are more likely to gain credibility with consumers and potentially have economic advantages related to customer relations, business cooperation and the financial market. Thereby, assessing and reporting biodiversity impacts and values in a standardised and comparable form is critical for supporting decision-making on more sustainable practices.

The inclusion of biodiversity and ecosystem services into corporate reporting is an incipient trend. It is the expectation that it enhances the understanding of the value of biodiversity for businesses and, in the long term, leads to more sustainable economic activities at national and international level. International initiatives and organisations including the Natural Capitals Coalition and the Value Balancing Alliance among others are collaborating with the European Commission on the standardisation of corporate reporting processes. The same applies to economic reporting at the macro level, i.e. the national level.

The project works towards supporting the integration of biodiversity and ecosystem services into corporate and national accounts, so that the multiple values of biodiversity and ecosystems, e.g. for social prosperity as well as a "productive factor" - and not only as raw material - receives a higher appreciation in politics, economy and society.

Bio-Mo-D research design consisting of seven work packages (WP)

1 UN (2021) System of Environmental-Economic Accounting—Ecosystem Accounting: Final Draft. The core issue here is the further development of environmental economic accounts.

The Leibniz Institute of Ecological Urban and Regional Development is jointly funded by the federal government and the federal states.

FS Sachsen

This measure is co-financed by tax funds on the basis of the budget approved by the Saxon State Parliament.